SGIM Calls for End to Fee-For-Service

Schroeder acknowledges that a transition away from fee-for-service will be complicated. "Phasing out implies that it will take some time," he says. "There may be pockets due to size or geographic isolation or difficulty in getting other forms of payment. You will still have some stand alone fee-for-service, but the commission's sense was we should try to make these more oddities than common practice."

Richard "Buz" Cooper, MD, a healthcare economist at the University of Pennsylvania's Wharton School, told HealthLeaders Media in an email exchange that eliminating fee-for-service has been a popular idea in the healthcare reform movement but that "it's hard to find evidence that FFS makes a difference."

"My impression from the various studies is that the added productivity of physicians under FFS counterbalances their poorer productivity under other systems of compensation, and the net result is that there is little difference," Cooper says.

The commission's 12 recommendations include increasing reimbursement for evaluation and management services for all physicians, while holding flat reimbursements for technical services provided by surgeons, radiologists and other specialists. Schroeder says fee-for-service does not reward physicians for preventive healthcare consultations and discourages them from spending time with chronic care patients to create a care regimen.

The skewed incentives of fee-for-service have created a widening pay gap between specialists and primary care physicians and have contributed to the nation's shortage of primary care physicians. The study notes that radiologists earned $315,000 on average in 2011 while primary care physicians earned $158,000.

Bart Lee (3/4/2013 at 3:44 PM)
Dr. Knight is right. When people use whatever but don't pay for that whatever, they use a whole lot more of it, limited by only their own better uses of their time. Make employee benefits fully taxable and effective incentives will appear to control costs. Until then, we're on our way to infinite demand for life -prolonging medical care, always paid for by other people [INVALID] so what's not to like about that? ##

James G Knight MD (3/4/2013 at 9:49 AM)
The problem isn't Fee-For-Service; it's the third party payment method that has evolved as a consequence of tax law. The problems are the consequence of someone other than the consumer of services paying the cost of those services. A consumer who is insulated from the cost of the goods and services they use, consume more services and unscrupulous physicians are prone to offer more (unnecessary) services. Consumer directed health care has been shown to control costs without loss of health outcomes. Reconnecting consumers to the lion's share of their day-to-day health care expenditures, while still protecting them from financial ruin due to major illnesses or injury (high deductible insurance coverage), right-sizes health care thru market forces. Making doctors salaried employees is the DMV/ post office approach to the problem and will produce the same culture endemic to these institutions...